Refer to Table 9-2 a what .enterprise value/ EBITDA" multiple is implied by a terminal value PV of $71,745,960, to show how you calculate your answer A number without corresponding pgical work will not receive credit b. Use method #2 to calculate terminal value Assume net operating income in 2020 is $14,400,000 and depreciation for 2020 is forecasted at $8,250,000. Use an Enterprise value /EBITDA ratio of 6.00 if the discount rate is 9 8%. Be sure Current liabilitics 37,748 922 Common stock (par) Paid in capital Retained carnings Common equity Total 290 353 20,712-517 $9,500000 59,600.000 9,600,00059.600,000 59,500,000 59,500,000 59.500,000 21.337,140 5,361.689 19.759 398 $ 89,005,959 5 109 825,826 s111,00.461 $ 113,24208 $115 053,366 $116.937.102 118,896,188 $ 120933.637 Firm FCE 2015 $ 6,427.318 (1,606,830) $4,820,489 7,856,682 (7,856,682) (1.281,602) 2020 $ 8,939.292 $ 11,656,244 7.658,678 (1.914,670) $ 5.744.009 10,271,131 (2,567.783) s 7.703,349 7.856,682 (7.856,682) (1,441.628) S 6,261,721 (2.914,061) (3,274,190) $ 9,822 571 taxes (NOPAT) $ 6,704,469 7.856.682 (7,856,682) (1.386,180) 5.318.289 s 8,742.183 Less capital expenditures (CAPEX) Less: changes in net working capital Equals firm FCF 7856,682 (7,856,682) (1.,499,293) 7,856,682 (7,856,682) (1559,264) (7,856,682) (1,332,866) Terminal-Value Esticeates (for FCFs Reccived in 2021 and Beyond) Growth Rates (g) 1205 1384 16.19 19.43 1136 12.95 15.00 17.76 10.75 12.17 13.97 16.3 10.20 1148 13.08 15.1 $ 99,557,908 $ 114,327,938 $133,786,86s $160.588,784 93.901.209 $106 999224 $123949596 $146344924 $ 88.852.757 $ 100,553,487 $115,459,897 $ 135,098.so $ 84319453 94,840.221 $ 108,058,622 $ 125,164,788 Method 2-Multiples Using Enterprise-Value to EBITDA Ratio Enterprise Value EBITDA Terminal Value $104,767.215 115,243,936 125.720,658 136,197,379 146,674,101 5.50 6.00 7.00 Cost of deb-The estimated borrowing rate is 65% with a marginal tax of 25%, resulting in an after-tax cost of debt of 4875%. Cost o equity debt beta of 30, Using the capital asset pricing model CAPM) with a ten-year Treasury bond yield of 502% and a market risk premium of 5% produces an estimate of the levered cost of equity of 11.42%. An average industry unlevered equity beta of 89 implies a levered equity bet for GRC of 1.28, assuming a target debt ratio of 40% and a average cost of capital (WACC Using the target debt-to-value ratio of 40%, the WACC is approximately 88%. Planning Period FCF $26,201,884 $25,309,8517 $24.461,738 Method 1 $78,986,073 $74,729,086 $70,737,378 Method 1 $105,187,958 $100,038,943 $ 95,199,116 Method 2 $106.314,150 $101,104,439 7.8% $80,112.266 $75,794,582 $71,745,960 98%
